Viet
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Japans China Row May Spur GDP Fall This Quarter, JPMorgan Says
- Thread starter gpit
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ahfatzia
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China market too important for Japan investors to ignore
Japanese companies are not pulling out of the Chinese market despite tension over the Diaoyu Islands, a Japanese envoy said.
"Japanese investors will not exit China because of the importance of the Chinese market and Japanese companies will not give up," said Atsuyuki Oike, the economic section minister of the Japanese embassy in Beijing.
Oike said he has not received any information of a Japanese company deciding to withdraw.
Japanese companies are boosting their presence overseas due to sluggish domestic demand.
By the end of 2010, the number of Japanese enterprises in China had reached 22,307, with total registered capital of $94.08 billion.
Tian Xue, a spokeswoman for the Tianjin Economic-Technological Development Area, a major investment destination for Japanese companies in China, said that no Japanese company had left the area.
However, Oike said some Japanese investors had concerns over investment in China following tension between the two countries.
The Japanese government "purchased" the islands in September from so-called Japanese private owners, a move that caused widespread anger in China.
Reuters released a survey illustrating that almost a quarter of Japanese manufacturers are rethinking investment plans in China and some may shift production.
"Japanese investment in China may see a slowdown in the next two months, because of a slump in sales in China," Oike said.
"But in the long term, investment will return to normal levels. Any plans to suspend investment are temporary," he said.
In the first nine months of this year, Japanese investment in China hit $5.62 billion, a year-on-year rise of 17 per cent, making it the leading overseas investor, according to the Ministry of Commerce.
Commenting on Japanese companies reportedly increasing investment in Southeast Asian countries, Oike said that it doesn't necessarily mean that Japanese companies are shifting away from China to elsewhere.
"The investment plan in Southeast Asian countries, such as Thailand, only aims to meet demand from the local market through localized production," Oike said.
Yao Haitian, a researcher from the Institute of Japanese Studies at the Chinese Academy of Social Sciences, agreed.
Citing the potential of China's market, Yao said it would be hard for Japanese companies to give up investment plans in this country.
"Compared with the investment environment in Southeast Asian countries, China has its own advantages, including mature infrastructure, workforce and market mechanisms, which tailor to the needs of Japanese companies," Yao said.
But tension over the islands is likely to cast a shadow over economic ties, he said.
The auto sector was worst hit, according to the Japanese embassy.
Toyota said it sold 45,600 vehicles in China in October, the second straight month of falling sales, which are down 44.1 per cent from the same period last year.
Honda reported monthly sales of 24,115 cars in October. This represented a drop of 53.5 per cent from a year earlier and Nissan sold 64,300 cars in October, down 40.7 per cent year-on-year.
Auto sales in China account for nearly a quarter of Japanese global vehicle sales, experts said.
"Although they are suffering big drops, Japanese car giants will get through the difficult times thanks to their strong international competitiveness," Oike said.
Oike said it is the small and medium-sized Japanese car component suppliers that are confronted with the most serious problems.
Japanese retailers in China have seen business recover, he said.
China market too important for Japan investors to ignore
When it comes to running a business the Japanese are second to none. They can work very hard and bite the bitter pills too.
Japanese companies are not pulling out of the Chinese market despite tension over the Diaoyu Islands, a Japanese envoy said.
"Japanese investors will not exit China because of the importance of the Chinese market and Japanese companies will not give up," said Atsuyuki Oike, the economic section minister of the Japanese embassy in Beijing.
Oike said he has not received any information of a Japanese company deciding to withdraw.
Japanese companies are boosting their presence overseas due to sluggish domestic demand.
By the end of 2010, the number of Japanese enterprises in China had reached 22,307, with total registered capital of $94.08 billion.
Tian Xue, a spokeswoman for the Tianjin Economic-Technological Development Area, a major investment destination for Japanese companies in China, said that no Japanese company had left the area.
However, Oike said some Japanese investors had concerns over investment in China following tension between the two countries.
The Japanese government "purchased" the islands in September from so-called Japanese private owners, a move that caused widespread anger in China.
Reuters released a survey illustrating that almost a quarter of Japanese manufacturers are rethinking investment plans in China and some may shift production.
"Japanese investment in China may see a slowdown in the next two months, because of a slump in sales in China," Oike said.
"But in the long term, investment will return to normal levels. Any plans to suspend investment are temporary," he said.
In the first nine months of this year, Japanese investment in China hit $5.62 billion, a year-on-year rise of 17 per cent, making it the leading overseas investor, according to the Ministry of Commerce.
Commenting on Japanese companies reportedly increasing investment in Southeast Asian countries, Oike said that it doesn't necessarily mean that Japanese companies are shifting away from China to elsewhere.
"The investment plan in Southeast Asian countries, such as Thailand, only aims to meet demand from the local market through localized production," Oike said.
Yao Haitian, a researcher from the Institute of Japanese Studies at the Chinese Academy of Social Sciences, agreed.
Citing the potential of China's market, Yao said it would be hard for Japanese companies to give up investment plans in this country.
"Compared with the investment environment in Southeast Asian countries, China has its own advantages, including mature infrastructure, workforce and market mechanisms, which tailor to the needs of Japanese companies," Yao said.
But tension over the islands is likely to cast a shadow over economic ties, he said.
The auto sector was worst hit, according to the Japanese embassy.
Toyota said it sold 45,600 vehicles in China in October, the second straight month of falling sales, which are down 44.1 per cent from the same period last year.
Honda reported monthly sales of 24,115 cars in October. This represented a drop of 53.5 per cent from a year earlier and Nissan sold 64,300 cars in October, down 40.7 per cent year-on-year.
Auto sales in China account for nearly a quarter of Japanese global vehicle sales, experts said.
"Although they are suffering big drops, Japanese car giants will get through the difficult times thanks to their strong international competitiveness," Oike said.
Oike said it is the small and medium-sized Japanese car component suppliers that are confronted with the most serious problems.
Japanese retailers in China have seen business recover, he said.
China market too important for Japan investors to ignore
When it comes to running a business the Japanese are second to none. They can work very hard and bite the bitter pills too.
jhungary
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Will there be damage done to the Japanese? Yes
Will there be damage done to the Chinese? Yes
Will the damage done to the Japanese a lot greater than the Chinese? We don't know
All the words are just talk, that's very simple. Yes, China is the biggest market in Japanese eyes, but there are a lot more other market offered to Japan beside Chinese, same goes to the Chinese, if China don't sell to Japan, they will just go somewhere else. The market is too big for Chinese to give a headache to the Japanese and vice versa.
Will the Japanese sigh? Of course they will, they lose a big chunk of meat, but will that be a problem? I hardly think so. Since i am too lazy, i would not type that all again, so it will be the same for the Chinese too.
Do remember, unless Japan no longer control Japan, whatever financially setback, they can recoup.That's has been done during the 80s and 90s. Just the thing is, they need to start over now if they have to shift their attention away from China.
Remember, no market is too precious, and if you just limit your scope to one market, then you are destined to fail.
Will there be damage done to the Chinese? Yes
Will the damage done to the Japanese a lot greater than the Chinese? We don't know
All the words are just talk, that's very simple. Yes, China is the biggest market in Japanese eyes, but there are a lot more other market offered to Japan beside Chinese, same goes to the Chinese, if China don't sell to Japan, they will just go somewhere else. The market is too big for Chinese to give a headache to the Japanese and vice versa.
Will the Japanese sigh? Of course they will, they lose a big chunk of meat, but will that be a problem? I hardly think so. Since i am too lazy, i would not type that all again, so it will be the same for the Chinese too.
Do remember, unless Japan no longer control Japan, whatever financially setback, they can recoup.That's has been done during the 80s and 90s. Just the thing is, they need to start over now if they have to shift their attention away from China.
Remember, no market is too precious, and if you just limit your scope to one market, then you are destined to fail.
terranMarine
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A while ago CCTV interviewed a few Japanese companies in China and from their conversations with the reporter i can conclude they are largely dependent on China for the manufacturing process. It just shows they don't have any plans or simply can't move to India, Vietnam or Philippines. That does not mean car manufacturers won't invest in these countries or other South East Asian parts as labor cost is cheaper but to set up the factories it would require capital and infrastructure. Like i said before shifting manufacturing can safe money and a way to escape the riots in China but this measure cannot compensate the loss which is highlighted by the sharp drop in sales. Many companies don't have the capital to shift their factories to other locations and need China hence they haven't relocated and Chinese market is too important to them. Without firing a single bullet at them Japan is feeling the pain in the automobile and tourist industries and other sectors. Then there's the Fukushima cleanup which Tepco estimates $ 125 bln is needed. The longer the dispute last the bigger the financial blow gets. China ain't stopping sending patrol boats near the area. If there are still people in China buying Japanese cars i certainly hope the patriots will go smash those cars into pieces, that will teach them to buy German, Korean or other brands.
ahfatzia
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Without doubt Japanese companies are not leaving China, threatening notwithstanding, without holding their positions as long as they can. While other third world markets can have potential growths but China's consumer growth is as sure as the sun coming out from the east and at a much quicker pace. No business people in their fair minds would ignore that potential and China should use that to her utmost advantage.
Japanese companies will stay and will invest in more capital expansions when things quiet down and if they leave they'll be the sorriest cats around. The biggest consumer market in the world sometime in the near future? You're the king of the hill!
......................
Japan economy likely in recession
JAPAN - The composite index of coincident economic indicators for September dropped for the sixth straight month, indicating the national economy has likely entered a recession, according to the Cabinet Office.
The coincident CI, which reflects current economic conditions, stood at 91.2 compared with 100 for the base year of 2005, down 2.3 points from the previous month, the office said in a preliminary report released Tuesday.
In addition to declining exports stemming from a slowdown in overseas economies, some indicators, such as industrial output and shipments of durable goods, dropped due to sluggish domestic auto sales following the end of a government subsidy programme for purchases of environmentally friendly vehicles.
The Cabinet Office revised downward its basic assessment, saying the national economy has moved into a recessionary phase and is likely in the first stages of an economic slowdown.
This was the first such assessment made since May 2011, just after the Great East Japan Earthquake and tsunami.
Concerning future prospects, the Cabinet Office said it will be necessary to keep a close eye on the global economic downturn and exports.
Some market observers suspect the domestic economy entered a recessionary phase after peaking in March.
http://news.asiaone.com/News/AsiaOne+News/Asia/Story/A1Story20121108-382136.html
terranMarine
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Anti China posters here said factory workers would be out of jobs and will cause unrest. Even if these factories will be relocated it will not bring China down. Well these companies ain't leaving guess they lost their argument. So who needs who the most? I think we have our answer, but for those who remains skeptical can wait for the results of Japanese economy for the next couple of months. Plus we have ahfatzia here to keep us updated of the latest financial news. Face it Japan made a huge mistake.
ahfatzia
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It's not that I especially love to post negative economic news on Japan, it's just that there ain't any good news recently for Japan in all fronts. I always believe China, with her exponential growth in internal consumption, can take Japan out of her quagmires but unfortunately her mishandling of Diaoyu was very untimely.
Here's another piece about her internal consumption and moods:
Despite its report this week saying the economy may be contracting, there is not much the government can do with limited funding resources, causing citizens to further tighten their belts.
The Cabinet Office on Tuesday revised downward its assessment of the coincident activity index for September to "signaling a possible turning point" toward contraction.
The downswing appears to stem chiefly from two fronts, one external and one internal: slumping exports on weak activity overseas, including the key market of China amid the bitter Senkakus territorial row, and stifled consumer spending domestically on anxiety about increased tax and other financial burdens.
"I feel the economic crisis in my bones," a 59-year-old housewife from Yokohama said at a consumer electronics shop in Tokyo on Tuesday evening. "At supermarkets, I check the fliers from top to bottom to buy discount merchandise."
Supermarkets reported year-on-year drops in sales for the seventh straight month through September. Overshadowing them is concern among shoppers about expected increases in their expenditures, such as hikes in electricity bills and the sales tax hike slated in April 2014.
These factors are compounded by general anxiety among the public about the future of the social security system.
"Consumers are getting increasingly wary of the need to protect their livelihood," said an official at the Japan Chain Stores Association.
Against this backdrop, major retailer Aeon Co. has marked down the prices of 1,000 products since summer, while Daiei Inc. and Seiyu GK, a unit of Wal-Mart Stores Inc., have also come up with across-the-board cuts in foods and general merchandize. To stimulate consumer demand, the retail industry appears to have moved into a war of attrition even at the expense of securing profit margins.
More on Japan's internal troubles if you have the stomach for them: Falling exports, tax anxieties take toll on economy | The Japan Times Online
terranMarine
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I know what you mean, it's not that i wish Japan's economy go down the drain either but since they picked the wrong path to antagonize China then they can expect serious consequences. Had they not done this then it would have benefited both nations with stronger trade. It's up to Japan how they want to solve the mess as China ain't gonna back down. If they want to save face, focus on their political career and don't mind their economy going down then keep it up.
ahfatzia
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Japan gov't debt rises to record high in Sept.
Japan's government debt registered a record-high 983.30 trillion yen (about 12.4 trillion U.S.dollars) at the end of September mainly due to spending on reconstruction following the March 2011 earthquake and tsunami, Finance Ministry data showed Friday.
The debt includes 803.74 trillion yen in government bonds, 125. 37 trillion yen in bills to cover short-term funding needs, and 54. 19 trillion yen in borrowing from financial institutions, according to reports.
The outstanding central government debt was up 0.7 percent from three months earlier. The ministry has expected the total amount to top 1,000 trillion yen by the end of fiscal 2012, in March.
Japan gov't debt rises to record high in Sept. - China.org.cn
Japan is expecting a contracting economy this fiscal year ending Mar 31, 2013 and will owe 1,000 trillion Yens (about 13 trillion USD). That means her debt to GDP ratio will be over 210%, the highest of all big economies. So Japan's debt is not too far away from the US's 16+ trillion but the US economy is better than twice of that Japan's.
Japan's government debt registered a record-high 983.30 trillion yen (about 12.4 trillion U.S.dollars) at the end of September mainly due to spending on reconstruction following the March 2011 earthquake and tsunami, Finance Ministry data showed Friday.
The debt includes 803.74 trillion yen in government bonds, 125. 37 trillion yen in bills to cover short-term funding needs, and 54. 19 trillion yen in borrowing from financial institutions, according to reports.
The outstanding central government debt was up 0.7 percent from three months earlier. The ministry has expected the total amount to top 1,000 trillion yen by the end of fiscal 2012, in March.
Japan gov't debt rises to record high in Sept. - China.org.cn
Japan is expecting a contracting economy this fiscal year ending Mar 31, 2013 and will owe 1,000 trillion Yens (about 13 trillion USD). That means her debt to GDP ratio will be over 210%, the highest of all big economies. So Japan's debt is not too far away from the US's 16+ trillion but the US economy is better than twice of that Japan's.
ahfatzia
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Japanese car sales in China drop by 59.4 percent during October: group
SHANGHAI -- Sales of Japanese passenger vehicles in China slumped 59.4 percent on-year in October, a Chinese industry group said Friday, as a territorial row between the countries pummeled demand.
Japanese-brand car sales in China — the world's largest auto market — fell to 98,900 units last month, the China Association of Automobile Manufacturers said in a statement.
A bitter dispute flared in mid-September after Tokyo nationalized an East China Sea island chain also claimed by Beijing, setting off huge demonstrations across China and calls for a boycott of Japanese products.
Japanese car sales in China drop by 59.4 percent during October: group - The China Post
SHANGHAI -- Sales of Japanese passenger vehicles in China slumped 59.4 percent on-year in October, a Chinese industry group said Friday, as a territorial row between the countries pummeled demand.
Japanese-brand car sales in China — the world's largest auto market — fell to 98,900 units last month, the China Association of Automobile Manufacturers said in a statement.
A bitter dispute flared in mid-September after Tokyo nationalized an East China Sea island chain also claimed by Beijing, setting off huge demonstrations across China and calls for a boycott of Japanese products.
Japanese car sales in China drop by 59.4 percent during October: group - The China Post
China can indeed ignore japan and still grow annually around 8%.
Maybe you should pray japan can grow as well while ignoring China's market.
I am surprised that it only drops by about 60%.
I think the reason is that government vehicle purchases may be the reason.
Further opposition against government agencies purchases related to japs vehicles should be on the next agenda.
Maybe you should pray japan can grow as well while ignoring China's market.
I am surprised that it only drops by about 60%.
I think the reason is that government vehicle purchases may be the reason.
Further opposition against government agencies purchases related to japs vehicles should be on the next agenda.
ahfatzia
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How debts and double-dealing sparked Japan-China islets row. The story behind the sale of Diaoyu
Kunioki Kurihara
(Reuters) - The road to China's breakdown in relations with Japan began here - a sleepy Tokyo suburb that is home to the reclusive real-estate investor at the centre of the explosive property deal that enraged Beijing.
Surrounded by concrete walls, security cameras and warnings of guard dogs, Kunioki Kurihara has shunned the spotlight in his compound since closing a deal to sell three uninhabited islands in the East China Sea to Japan's government in September.
The islands, known as the Senkaku in Japan, are also claimed by China, where they are known as the Diaoyu and deemed part of its national territory for centuries.
Their $25.5 million sale sent tension soaring between Tokyo and Beijing. Seen in Beijing as a nationalisation of private property, it sparked violent protests and a boycott of Japanese goods. Chinese ships were dispatched to patrol disputed waters.
Participants close to the deal describe how a property magnate with heavy debts clinched a deal he had sought with the government for at least six years by playing it off against a fiery nationalist - Tokyo's then-governor, Shintaro Ishihara.
Ishihara has since resigned to return to national politics at age 80. It was his initial offer to buy the islands that led to a quick government purchase - at a markup of at least half a million dollars.
Kurihara, 70, declined a request for an interview.
His younger brother Hiroyuki, who describes himself as family spokesman, has used his sudden fame to promote a book, "Senkaku Islands for Sale" -- and a longshot plan to turn the islands into a centre for medical tourism.
"It's odd that they owned the islands for so long," said Jeffrey Kingston, director of Asia Studies at Temple University in Japan. "It's only now that the ante is up."
FROM FISH PROCESSING TO FLASHPOINT
Mostly rocky outcroppings which serve as a home to migratory birds and a herd of wild goats, the islands are closest to Taiwan, about 210 km (125 miles) northeast of Taipei and 1,800 km from Tokyo.
The largest, Uotsurijima in Japanese, rises up like a forest-canopied mountain from the sea, with no port for landing. A little larger than New York's Central Park, the island's highest point tops the Eiffel Tower.
The Kuriharas obtained the islands for an undisclosed amount in the 1970s from Zenji Koga, a journalist from Okinawa, an island to the northeast. Before World War Two, his father had run a fish processing plant on Uotsurijima.
Japan annexed the islands in 1895 and Koga rented them, then bought them in 1932, when they fell under the jurisdiction of colonial Taiwan, also annexed by Japan.
Taiwan also claims the islands.
The Kuriharas obtained the islands after the United States returned Okinawa to Japan in 1972 and interest grew in potential oil and gas deposits.
But the family's focus was on commercial and residential property in Omiya, a legacy of wealth built up in the rice trade. Records show Kunioki pledged at least 75 real estate parcels in Omiya and Tokyo against his bank borrowing.
One building next to his house served until recently as headquarters of a Buddhist-affiliated group, Kenshokai, which preaches that Japan faces an apocalyptic reckoning and invasion by China. The group, a former Kurihara tenant, has described the isles as a potential flashpoint in that conflict.
In the summer of 2011, Kurihara approached Akiko Santo, a lawmaker from the opposition Liberal Democratic Party, saying he wanted to try to sell the islands to Tokyo governor Ishihara.
Ishihara became internationally known in 1989 for his best-seller "The Japan that Can Say No," an argument to reduce Japan's reliance on the protection of the United States.
"THE STRONGEST PROMISE YOU CAN MAKE"
Kurihara described himself as an admirer of the governor and said he wanted to sell him the islands, Santo said. The two met at the Omiya compound in September 2011 and later in Tokyo's fashionable Ginza district, where they reached a verbal deal.
"They shook hands and gave their word to each other as men, which in Japan is the strongest promise you can make," she said.
In April, Ishihara announced a plan to buy the islands, raising $17 million from private donors. His deputy, Vice-Governor Naoki Inose, also an author, estimated Kurihara's net debt at about 1.5 billion yen, almost $19 million.
"I'm not stupid. I checked his mortgages," Inose told Reuters.
Records show Kurihara had a credit line of almost $50 million, or 4 billion yen by 2012. The funding was provided by Bank of Tokyo-Mitsubishi UFJ, Japan's largest lender, and the Saitama Shinkin Bank, a local bank.
The final offer from Ishihara's team was just over 2 billion yen, nearly $25 million, two people close to the talks said.
But Kurihara had also been talking to the government.
Prime Minister Yoshihiko Noda saw a national bid as a way to head off a more damaging confrontation with China.
"He first approached us about the islands in 2006," said Akihisa Kameda, the official responsible for negotiating the deal.
Kameda said Kurihara had earlier rejected proposed swaps for forests or fields elsewhere in Japan. With the Tokyo governor offering cash, the government was forced into the bidding.
By late June, Kurihara had grown worried that the sale could be tied up in Tokyo's local parliament or derailed by assessors, Santo said. He broke off talks with Ishihara's team with a curt message: "I decided to sell the islands to Japan."
Government negotiators offered Kurihara the higher price, people involved told Reuters, and fast-tracked a deal that would have taken up to a year with a private-sector buyer.
Kameda offered few details on the price, saying that it reflected a calculation of what it would cost to "replace" the islands, without further explanation. Officials declined requests by Reuters to see documents related to the valuation and sale.
On September 11, Japan announced it had nationalised three of the Senkaku islands, generating outrage in China, where a Communist Party Congress opened last week to put in place new leaders who will face the challenge of re-engaging with Japan.
"Japan should have pressed more for China to accept that the Senkaku are Japanese islands," Kurihara's brother, Hiroyuki, told Reuters.
Kazuko Kurihara, a younger sister, still holds the second-largest island, Kubajima, and in May renewed a 20-year lease to the Defence Ministry. Kubajima has been made available to the United States as a bombing range, last used in 1978.
Ishihara has told aides he wants to fund building projects on the islands. That would strain ties with China further.
Santo said she understood Kurihara's pursuit of the highest offer. "For him, business considerations were the most important. After all, he is a real-estate broker," she said.
How debts and double-dealing sparked Japan-China islets row | Reuters
.............
Skeptics say what happens if Japanese pull out of China?
No problems, because the exponent growth of China's internal consumptions numerous well capitalized companies around the world will pick up the slags in no time. And besides China has more than $3 trillion forex that's earning pennies, a small portion of that money can come home to invest. How about some of her other investment portfolios:
China wealth fund eyes Asia "as Western protectionism rises"
BEIJING (Reuters) - China's sovereign wealth fund will focus more of its $482 billion firepower on Asia in twin bids to beat a rise in protectionism in the West and boost exposure to rapid regional growth, chairman and chief executive Lou Jiwei said.
The man charged with stewardship of a slice of the world's largest store of foreign wealth lauded the British approach to overseas investment in public sector projects as one for the world to follow and said the policy response to Europe's debt crisis was a reason to stay underweight bonds and stocks there.
http://articles.chicagotribune.com/...1110_1_wealth-fund-sovereign-wealth-lou-jiwei
Actually home is the sure place for growth.
Kunioki Kurihara
(Reuters) - The road to China's breakdown in relations with Japan began here - a sleepy Tokyo suburb that is home to the reclusive real-estate investor at the centre of the explosive property deal that enraged Beijing.
Surrounded by concrete walls, security cameras and warnings of guard dogs, Kunioki Kurihara has shunned the spotlight in his compound since closing a deal to sell three uninhabited islands in the East China Sea to Japan's government in September.
The islands, known as the Senkaku in Japan, are also claimed by China, where they are known as the Diaoyu and deemed part of its national territory for centuries.
Their $25.5 million sale sent tension soaring between Tokyo and Beijing. Seen in Beijing as a nationalisation of private property, it sparked violent protests and a boycott of Japanese goods. Chinese ships were dispatched to patrol disputed waters.
Participants close to the deal describe how a property magnate with heavy debts clinched a deal he had sought with the government for at least six years by playing it off against a fiery nationalist - Tokyo's then-governor, Shintaro Ishihara.
Ishihara has since resigned to return to national politics at age 80. It was his initial offer to buy the islands that led to a quick government purchase - at a markup of at least half a million dollars.
Kurihara, 70, declined a request for an interview.
His younger brother Hiroyuki, who describes himself as family spokesman, has used his sudden fame to promote a book, "Senkaku Islands for Sale" -- and a longshot plan to turn the islands into a centre for medical tourism.
"It's odd that they owned the islands for so long," said Jeffrey Kingston, director of Asia Studies at Temple University in Japan. "It's only now that the ante is up."
FROM FISH PROCESSING TO FLASHPOINT
Mostly rocky outcroppings which serve as a home to migratory birds and a herd of wild goats, the islands are closest to Taiwan, about 210 km (125 miles) northeast of Taipei and 1,800 km from Tokyo.
The largest, Uotsurijima in Japanese, rises up like a forest-canopied mountain from the sea, with no port for landing. A little larger than New York's Central Park, the island's highest point tops the Eiffel Tower.
The Kuriharas obtained the islands for an undisclosed amount in the 1970s from Zenji Koga, a journalist from Okinawa, an island to the northeast. Before World War Two, his father had run a fish processing plant on Uotsurijima.
Japan annexed the islands in 1895 and Koga rented them, then bought them in 1932, when they fell under the jurisdiction of colonial Taiwan, also annexed by Japan.
Taiwan also claims the islands.
The Kuriharas obtained the islands after the United States returned Okinawa to Japan in 1972 and interest grew in potential oil and gas deposits.
But the family's focus was on commercial and residential property in Omiya, a legacy of wealth built up in the rice trade. Records show Kunioki pledged at least 75 real estate parcels in Omiya and Tokyo against his bank borrowing.
One building next to his house served until recently as headquarters of a Buddhist-affiliated group, Kenshokai, which preaches that Japan faces an apocalyptic reckoning and invasion by China. The group, a former Kurihara tenant, has described the isles as a potential flashpoint in that conflict.
In the summer of 2011, Kurihara approached Akiko Santo, a lawmaker from the opposition Liberal Democratic Party, saying he wanted to try to sell the islands to Tokyo governor Ishihara.
Ishihara became internationally known in 1989 for his best-seller "The Japan that Can Say No," an argument to reduce Japan's reliance on the protection of the United States.
"THE STRONGEST PROMISE YOU CAN MAKE"
Kurihara described himself as an admirer of the governor and said he wanted to sell him the islands, Santo said. The two met at the Omiya compound in September 2011 and later in Tokyo's fashionable Ginza district, where they reached a verbal deal.
"They shook hands and gave their word to each other as men, which in Japan is the strongest promise you can make," she said.
In April, Ishihara announced a plan to buy the islands, raising $17 million from private donors. His deputy, Vice-Governor Naoki Inose, also an author, estimated Kurihara's net debt at about 1.5 billion yen, almost $19 million.
"I'm not stupid. I checked his mortgages," Inose told Reuters.
Records show Kurihara had a credit line of almost $50 million, or 4 billion yen by 2012. The funding was provided by Bank of Tokyo-Mitsubishi UFJ, Japan's largest lender, and the Saitama Shinkin Bank, a local bank.
The final offer from Ishihara's team was just over 2 billion yen, nearly $25 million, two people close to the talks said.
But Kurihara had also been talking to the government.
Prime Minister Yoshihiko Noda saw a national bid as a way to head off a more damaging confrontation with China.
"He first approached us about the islands in 2006," said Akihisa Kameda, the official responsible for negotiating the deal.
Kameda said Kurihara had earlier rejected proposed swaps for forests or fields elsewhere in Japan. With the Tokyo governor offering cash, the government was forced into the bidding.
By late June, Kurihara had grown worried that the sale could be tied up in Tokyo's local parliament or derailed by assessors, Santo said. He broke off talks with Ishihara's team with a curt message: "I decided to sell the islands to Japan."
Government negotiators offered Kurihara the higher price, people involved told Reuters, and fast-tracked a deal that would have taken up to a year with a private-sector buyer.
Kameda offered few details on the price, saying that it reflected a calculation of what it would cost to "replace" the islands, without further explanation. Officials declined requests by Reuters to see documents related to the valuation and sale.
On September 11, Japan announced it had nationalised three of the Senkaku islands, generating outrage in China, where a Communist Party Congress opened last week to put in place new leaders who will face the challenge of re-engaging with Japan.
"Japan should have pressed more for China to accept that the Senkaku are Japanese islands," Kurihara's brother, Hiroyuki, told Reuters.
Kazuko Kurihara, a younger sister, still holds the second-largest island, Kubajima, and in May renewed a 20-year lease to the Defence Ministry. Kubajima has been made available to the United States as a bombing range, last used in 1978.
Ishihara has told aides he wants to fund building projects on the islands. That would strain ties with China further.
Santo said she understood Kurihara's pursuit of the highest offer. "For him, business considerations were the most important. After all, he is a real-estate broker," she said.
How debts and double-dealing sparked Japan-China islets row | Reuters
.............
Skeptics say what happens if Japanese pull out of China?
No problems, because the exponent growth of China's internal consumptions numerous well capitalized companies around the world will pick up the slags in no time. And besides China has more than $3 trillion forex that's earning pennies, a small portion of that money can come home to invest. How about some of her other investment portfolios:
China wealth fund eyes Asia "as Western protectionism rises"
BEIJING (Reuters) - China's sovereign wealth fund will focus more of its $482 billion firepower on Asia in twin bids to beat a rise in protectionism in the West and boost exposure to rapid regional growth, chairman and chief executive Lou Jiwei said.
The man charged with stewardship of a slice of the world's largest store of foreign wealth lauded the British approach to overseas investment in public sector projects as one for the world to follow and said the policy response to Europe's debt crisis was a reason to stay underweight bonds and stocks there.
http://articles.chicagotribune.com/...1110_1_wealth-fund-sovereign-wealth-lou-jiwei
Actually home is the sure place for growth.
Obambam
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12 November 2012 Last updated at 02:22
Japan economy contracts as global slowdown hits exports
Japan's economy contracted in the July to September quarter, as a global economic slowdown and anti-Japan protests in China hurt its exports, while domestic consumption remained subdued.
Japanese car makers have seen their sales in China slide after the anti-Japan protests
Gross domestic product (GDP) contracted 3.5% from a year earlier.
Compared with the previous three months, the economy contracted 0.9%.
The weak data is likely to put pressure on the government to boost stimulus measures to spur growth.
"There are risks from both domestic and external factors," said Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
"As such, the Bank of Japan (BOJ) will stand ready to ease monetary policy again, and it would not surprise me if the BOJ eased again by the end of this year."
Heading for recession?
Japan's economy, the world's third-largest, has been trying to recover from last year's earthquake and tsunami, which caused widespread destruction in the country.
However, its recovery has been hampered by a combination of factors.
A slowdown in key markets, such as the US and eurozone has hurt demand for its exports, one of the biggest drivers of Japanese growth.
Slowing growth and anti-Japan protests in China - Japan's biggest trading partner - have further impacted its export sector.
To add to its woes, the debt crisis in the eurozone and weak recovery in the US have seen many investors flock to safe-haven assets such as the yen, resulting in the Japanese currency strengthening against the US dollar and the euro.
The yen has risen 5% against the US dollar since March this year and 8.5% against the euro during that period.
That makes Japanese goods more expensive for American and European consumers, hurting the earnings of the country's exporters.
To make matters worse, attempts by policymakers to boost domestic demand have had little effect. Private consumption fell 0.5% in the July to September quarter, from the previous three months.
Analysts said that given these factors the economy was likely to shrink further in the current quarter and enter a technical recession.
"The decline in exports seems large. Consumption and capital expenditure were also weak, showing that both external and domestic demand are weak," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.
"Economic data deteriorated sharply from September, and this means Japan is already in recession," he added.
Focus on yen
Faced with slowing external and domestic demand, Japan's central bank has taken various steps to try and spur growth.
Earlier this month, the BOJ extended its asset purchase programme by 11 trillion yen ($138bn; £86bn). Under the programme, the central bank buys bonds to keep long-term borrowing costs down.
It also said that it will offer unlimited loans to banks to encourage lending in an effort to boost domestic consumption.
However, analysts said the measures were unlikely to have a major effect, not least because firms were holding back expansion plans in the wake of an uncertain economic environment.
"There is very little demand for credit. In fact Japanese firms are holding back on capital expenditure," Junko Nishioka, the chief economist of RBS Securities in Tokyo, told the BBC.
Ms Nishioka added that policymakers instead needed to focus on measures that will help weaken the yen, as the uncertain global economic environment was likely to see the Japanese currency, which is seen by some as a safe-haven asset in such times, remain strong.
BBC News - Japan economy contracts as global slowdown hits exports
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